According to Bloomberg, despite the yen has been weak this year, history shows that the yen could still be an unexpected safe haven for investors seeking refuge in the US presidential election.

(Screenshot Source: Bloomberg)

Bloomberg compiled data shows that before past US elections, the yen has outperformed the dollar, Swiss franc, gold, US Treasuries, and euro, among the most popular safe assets.

According to BloombergIts price has soared to a historic high, closely related to market expectations of interest rate cuts by the Federal Reserve.analysis of the trends and the US stock marketImplied volatilityIn the analysis, on the eve of the US presidential election on November 5th, the Japanese Yen once again became the best performing currency in the market in extremely tense times.

Although the Japanese Yen has been the worst performing Group of Ten (G10) currency this year, traders tend to turn to the Yen during market volatility.

Former US President Donald Trump's odds slightly lead Democratic candidate Kamala Harris in the gambling market, putting pressure on investors to devise strategies to deal with the impact of Trump returning to the White House on various assets.

Bloomberg pointed out that clear results may take a long time to emerge after election day, which could amplify volatility across various corners of the market and prompt investors to seek safe havens.

(Screenshot Source: Bloomberg)

Ales Koutny, International Exchange Rate Manager at Vanguard, the world's second largest fund management company based in London, stated: 'The Yen is the best safe haven during the US elections.'

There is uncertainty after the October 27th Japan parliamentary elections. After the ruling coalition in Japan failed to secure a majority in parliament, the Yen against the US Dollar plummeted by 1%.

Before the establishment of the new government, there may be several weeks of political maneuvering, exacerbating the huge interest rate differential between Japan and other major economies, bringing huge selling pressure on the yen.

However, investors believe that the yen still has key advantages. Japan's record-breaking ¥3.02 trillion (approximately $20 billion) current account surplus, abundant yen liquidity, and Japan's relatively low inflation all help make the yen, the world's third largest trading currency, an attractive store of value.

Furthermore, tariff risks also favor the yen. During the election period, Japan has essentially avoided direct threats of import tariffs levied by Trump - these warnings keep investors highly vigilant about the potential damage to assets in targeted countries.

Equally important is that the yen exchange rate is at a historical low, providing greater upside potential in the event of market turbulence or government intervention to support the yen.

The Bank of Japan is currently the only developed market central bank approaching an interest rate hike as the next policy move.

Although it is widely expected that the Bank of Japan will keep rates unchanged this week, if the current weakness of the yen intensifies inflation, the likelihood of a rate hike by the Bank of Japan later this year could increase.

At 13:49 Beijing time, the USD/JPY is quoted at 152.84.